Switzerland appears to be a fortunate jurisdiction to be surrounded by a uniform customs and indirect tax environment. Nevertheless, despite the customs union and the increased efforts to harmonize indirect taxes at EU level, Swiss enterprises may indeed face unexpected challenges when attempting to export their goods into the EU. Let us look at some of those challenges in a nutshell.
It may seem obvious for Swiss enterprises to be able to directly customs clear their goods anywhere in the EU. However, in general EU terms, enterprises not established in the EU are not entitled to act as customs declarant (a limited number of exceptions exist.) On the contrary, they are often required to appoint a so-called indirect customs representative (e.g. a logistics service provider established in the EU), who will declare the goods in its own name, but to the benefit of the legal owner. This triggers unexpected costs that may influence the carefully planned supply chain.
To ease the burden on cross-border trade, the Community has granted options for Member States to allow non-established enterprises to act as a customs declarant under certain circumstances. This option has been exercised by Germany for instance and is widely relied on by Swiss enterprises clearing their goods in their own name directly at the German border.
Acting as a declarant in one’s own name means being the customs debtor and thus, being liable for customs duties (if any) as well as VAT and other taxes (e.g. excise) upon importation. Being a declarant presumes a great degree of trust towards the non-established entity since the EU customs authorities only have the chance to collect the customs debt from the declarant. This ‘gesture’ of the German customs legislation has its roots in historic trading patterns between the two countries.
Another interesting topic pops up when Swiss enterprises attempt to trade with customers in numerous Member States and to set up stocks in the EU. The EU VAT Directive includes ‘may’ provisions that are optional to be introduced by the Member States. An example could be the so-called ‘call-off stock’ regime, whereby the transfer of own goods from a Member State to another does not trigger a VAT registration obligation in the latter country, if certain conditions are met.
This provision aims to grant relief from the administrative burden of compliance tasks; nevertheless, it should be looked at thoroughly. Depending on its local implementation in the given Member State, the use of the simplification may undermine the relief from import VAT in the cases when the customs clearance should be followed by a VAT-exempt intra-Community supply.
As a matter of fact, the beauty of the EU lies in its diversity. As every beauty, it should be cherished and nurtured, but also be watched with a great degree of alertness.